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Details of Equity Based Healthcare Submitted to Congress
NOTE: Only the first page, the below Transmittal Letter, is scanned, for your verification of submission. The remaining text (12 double-spaced pages) has been copied & pasted for your easy reading and print-out. 
 
THE ESCROW-EQUITY HEALTHCARE (EEH)

 

Prepared by Daniel Cobble • To President Barak Obama and U.S. Congress (8\1\09)

Contents:

1. Introduction: EBHS - Native-driven Market Efficiencies

2. How EBHS Works

3. Structuring Insurance Coverage

4. Third-tier Payments by the Healthcare Trust Fund

 

5. The Premium Assistance Program

6. No Deductibles, Processing, Generally

7. The Preventive Healthcare Education Program

1. INTRODUCTION: EBHS – NATIVE-DRIVEN MARKET EFFICIENCIES

The Equity-based Healthcare System (EBHS) is a 3-tier healthcare claim arrangement where claims, upon growth, are paid from the claimant’s escrow, insurance company coverage, and by Government. A claim is initially paid as needed from the first tier, the claimant’s premium-paying, interest-bearing escrow account. As the first tier is depleted, claim payments would then come from the second tier, insurance company intermediate coverage. And finally, as insurance coverage is depleted, the claim is sustained by the third tier, the government’s Healthcare Trust Fund. Thereby, EBHS has the inherent characteristics for resolving the historical problems of healthcare. The system would: a) naturally induce high-level competition amongst practitioners resulting in the reduction of healthcare costs, as well as achieving higher quality – b) allow insurance companies to retain comparable income through managing their clients’ high-value escrow accounts – and c) governmental liabilities\ payouts are buffered by tiers one and two, that would keep taxes low AND eventually eliminate the need for Medicare and Medicaid. – Employers retain equity in EBHS when paying premiums for employees through the Premium Assistance Program (explained below). And yet, these native efficiencies of EBHS are thoroughly market driven, and made complete by the Preventive Healthcare Education Program. 

Another distinctly critical benefit is that EBHS’s structurally simple hierarchy may encompass the nation’s entire industry of healthcare delivery. Such streamlining would readily reduce administrative costs for practitioners, insurance companies, and Government; and be much less confusing for clients\policy holders\claimants. CIients would “lead” EBHS by insisting upon competitive rates charged to their escrows by practitioners. Thereby, EBHS would require clients to educate themselves during their decision-making to seek-out the “best bang for their bucks,” as that, in turn, would stem the problems of excessive healthcare (waste) and lack of quality. These long, sought-after benefits of efficiencies would respectively achieve the high healthcare value that we’ve all been seeking, inclusive of diametrically changing the incentives of practitioners, who must then feel the pressures of competition from the full population of clients within the “system” shopping for the best prices. For, EBHS allows everyone to participate. – Equally important, clients would then have the incentive to increase preventative care, that would further minimize cost exposures to insurance companies and Government. Thus, again, this arrangement can effectively eliminate Medicare and Medicaid, and thereby reducing the tax revenues paid into the Healthcare Trust Fund (HTF). – These inherent aspects of EBHS, the repositioning of competition and equity, must force high efficiency into healthcare delivery.

(Footnote 1: This complex problem of waste was recently discussed by Professor Stuart Altman of Brandies University and Dr. Troy Tippett, President of the American Assoc. of Neurological Surgeons on PBS Television (July 23, ’09). Dr. Tippett says currently we do not have a healthcare system. Professor Brandies says that we must change the current structure of the fee and service system.)

2. HOW EBHS WORKS

            EBHS provides a symmetrical cost arrangement of pay-outs to claims, by the client, insurance company, and the federal Healthcare Trust Fund (HTF). The costs are shared by tiered increments, and so, the client and insurance company have mutual interests in getting the most from practitioners without buying un-needed services. As stated, the insurance company achieves maximum profit by helping to facilitate efficiency within EBHS. Equally so is that the client induces effective competition amongst practitioners, since a claim is at first paid from his escrow account.

Everyone, by choice, is covered by EBHS. The premium outlay allows even marginalized clients to participate with the lowest payment of premiums. Again, in every EBHS account, premiums accrue into their own, individual, interest-bearing escrow that is underwritten by an insurance company with coverage per the amount of premium paid. Like whole life, escrows are then invested. – 1) Marginalized clients may seek assistance from the Premium Assistance Program (PAP), and 2) employers may also utilize PAP for their employees, since EBHS escrows are equity-based for the clients, having high potential value in the escrows (see details, pg. 10).

As yet another incentive, after these escrow accounts have accrued within a specified period (every seven years), the client without penalty may withdraw a “meaningful” percentage of funds (say 50%, while still paying his\her premiums) as a reward for building-up the account and minimizing or not having filed a claim. So, for most clients, the account would actually become an investment with moderate returns, while satisfying the security of healthcare.

Similar to whole life insurance products, where clients retain ownership of their whole life escrows, EBHS escrows have high value for clients. It must drive down healthcare costs and reduce demand, because clients are responsible for their escrows. When filing claims, they would now have incentive and interest in competitively “shopping around” (and as stated, educating themselves about the services they seek) to reduce payments from their escrows. – And yet, since everyone is covered, the sheer transactional volume of adding 40 million citizens to a full-fledged EBHS must increase business for practitioners and insurance companies. – Even during treatment care, clients would continue to pay their premiums, for continual build-up of the escrow or to be applied to their current claim. In this way, the client is always contributing to expenses, to off-set exposure by the insurance company and Government. When this intermediate coverage is depleted by a claim, HTF then takes over the claim.

 
 

3. STRUCTURING INSURANCE COVERAGE

Of course with EBHS, the insurance company would no longer retain premiums for their own equity. But with the higher value of EBHS escrow accounts, the insurance company may now increase premiums in higher income brackets, while, as explained above, the inherent incentives for clients would minimize the claims against those accounts, and thus increasing investment outlays for insurance companies. Hence, these combined higher-dollar escrows provide the vehicle for the insurance company to earn comparable income; as client incentives will prevent very many claims.

Payouts from insured amounts, of course, comprise the second-tier coverage for paying a claim. As explained, second-tier payouts are buffered by a claimant’s escrow first being charged and depleted, as first tier payments. – A nominal administrative fee is paid from each premium to the insurance company, to cover the ongoing administrative costs and tracking the various transactions, such as claims, transfers, and facilitating the Premium Assistance Program (PAP, see below). The insurance company would payout to practitioners from escrow accounts. Thus, insurance companies may be considered the managers of EBHS.

Keeping Practitioners Honest

Though the insurance company would not be allowed to interfere with a claim, i.e. the decisions made by the client and practitioner, it may contact the client and serves as a watchful eye upon practitioners, since it has a material interest in keeping costs down for its clients. Suspected price gouging and procedures deemed improper or excessive, for example, may be reported to the client, the practitioner, himself, as well as the proper governmental authorities. But again, the insurance company may not have the authority to deny paying the claim, to allow the procedure to proceed on course as a matter of efficiency for EBHS. – The insurance company may even provide precursors or recommendations to clients, prior to the client embarking upon a practitioner, such as a list of practitioners and their fees. – Again, EBHS works as a whole life policy, where the client would have full rights to the covered amount, for the procedures of medical practitioners, and not subject to the discretion of insurance companies. Aside from impropriety demonstrated to governmental officials, the insurance company cannot interfere with these claims.

As the third party of interest, the insurance company may then serve to help educate clients, not on the basis that the client should put full confidence in its information (though it would not be prudent to give false or slighted information), but that its information would give the client a time for pause, study and reconsideration, for a fuller understanding of the procedure. Hence, this native educational component of EBHS is further strengthened by the second-tier position of the insurance company, that helps to answer the loudly recognized need for patients to better understand what they need, and thus leading to a reduction in un-necessary healthcare and more preventive care. Experts “across-the-board” have called for this missing incentive: client education. – In effect, the insurance company would earn its income from the inseparable efficiencies of EBHS.

However, there is an inescapable complexity to insurance coverage. Unlike whole life insurance where coverage is paid only once, EBHS must allow the claimant to return for multiple claims, simultaneously and consecutively, for treatment(s) as well as for preventive care, until the covered amount is depleted. The client would continue to pay his premium, contributing to his healthcare. These premiums would be applied to medical procedures and prescriptions of which the insurance company pays out on a claim. It is only when the treatment and\or prescription ceases that the premiums will again begin to accrue into escrow for the client, i.e. unless the premiums exceed the costs of a claim.

Naturally, the insurance company must determine the coverage of the premiums paid by the client, but based upon the abundant characteristics of EBHS. The client\ policy-holder now has a new set of incentives, that adds high value to the escrow, to help reduce or prevent payouts from insurance coverage, that protects the escrow:

a) not file frivolous claims, 

b) increase preventive care,

c) educate oneself about proposed medical procedures and drugs,

d) shop for the lowest prices of practitioners and pharmacies,
          e) receive assessments & recommendations from insurance company to 
              help monitor practitioners,

f) employers retain equity in employee’s escrows, and

g) employers and clients may withdraw from escrows after extended

    period.
 

Keeping Insurance Companies Honest

            It is well expected that an insurance company will act to wrongfully to exploit EBHS, as there are apparent ways to do so. Therefore, some regulatory rules are necessary to protect clients, most especially since EBHS may now encompass the entire healthcare industry, as well as the whole U.S. population having ready access. Managing profits and revenue streams should come from the re-investment of escrow accounts and types of insurance products, but from no other source relating to clients. Hence, please the consider the following potential problems:
 

            1. Administrative fees paid to insurance companies from premiums can easily be overcharged. These fees should be nominal and charged as expenses, the cost of doing business, and not an opportunity for revenue streams. Congress should decide upon a ceiling for these costs (say 5% of premiums). Therefore, insurance companies should submit periodic reports showing its internal fee structure, including the accrued costs for administrative expenses. For example, the wages of managers and employees should be reported, to watch for excessive salaries.
 

            2. Any technical or medical assessment and\or recommendation that an insurance company would want to give a client is wholly discretional and given freely by the insurance company. These communications cannot be ethically held as a condition of insurance coverage. Therefore, any costs associated, thereof, should be absorbed by the insurance company. Therefore, these costs should be tracked to show how they are kept separate from other costs that are assessed against premiums. For example, the insurance company should be ready to present to regulators the amount of communications (emails, letters, etc.) conveyed to clients and thus the costs associated, thereof, and thus the costs should be shown as an expense. How many hours of research  went into an assessment? These costs should be tabulated but not charged to clients.

            Yet certainly, these costs are already known (or can easily be tabulated) by most established insurance companies, just as many technical and medical assessments have already been researched. For established companies, assessing fees and providing the discretionary service of opinions and recommendations would convey nominal costs, at best. In very many cases, where insurance company knowledge can save money for the client or company, costs are not ensued.
 

4. THIRD TIER PAYMENTS BY THE HEALTHCARE TRUST FUND (HTF);

ELIMINATING MEDICARE & MEDICAID

            Third-tier payments on a claim are paid-out by the government ‘s HTF, but only after coverage from the insurance company is depleted. Thus, by HTF being buffered by tiers one and two, governmental expenditure\exposure to healthcare would be significantly reduced. Those savings further improved from the incentives\benefits explained above, for achieving actual reduction in demand, per capita. This is even though the volume of healthcare would increase by the newly inclusion of 40 million people. For the reasons stated, it is reasonable to expect that HTF payments for third tier claims would be reduced to a fraction of what’s currently paid by Medicare and Medicaid. The incentives of the equity-based aspect would reduce demand for healthcare, as well as allowing second tier buffered care to be handled across-the-board by insurance companies. In fact, since everyone desiring healthcare would be encompassed by tiers one and two, Medicare and Medicaid may now be effectively eliminated, as HTF may takeover payments for chronic and disability care. However, those already receiving chronic and\or disability care from Medicare and Medicaid would be in the Split-tier Program for Chronic Illness & Disabilities (SPCID).

See the following on SPCID . . .

 

The Split-tier Program for Chronic Illness & Disabilities (SPCID)

With SPCID, clients who are already chronically ill and\or with disabilities, and

drawing Medicare or Medicaid, would still pay premiums to- and be administered by the insurance company (everybody desiring insurance pays into EBHS). But the insurance company would provide reduced coverage for these clients, and HTF would still takeover beyond that coverage. The primary distinction of SPCID is that the interest-bearing escrow and insurance coverage would only be used for cursory care of the chronically ill and disabilities, such as for doctor visits, screening tests, prescription drugs for non-chronic treatment, preventive care, etc., managed by the insurance company. SPCID is needed to retain the client’s incentives to protect the value of his escrow while continuing to receive indefinite governmental assistance. Cursory and non-chronic care are paid by tiers one and two, respectively, so that the insurance company is not subjected to the high, ongoing costs of chronic illnesses and disabilities for those who have not paid premiums upon inception of EBHS. But future chronically ill and disabled clients, those who have not filed with Medicaid or Medicare, would not be subjected to SPCID except under special circumstances. Therefore, SPCID will diminish over time. –  HTF would readily pay for the catastrophic aspects, chronic and disability care of these clients (prescription drugs, hospitalization, surgery, therapy, hospice, etc.). For SPCID clients, only prescription drugs and emergency care pertaining to the chronic illness and disability would be paid by HTF.  Under any other circumstance, payments would come from the first and second tiers until depleted.  – Taxpayers would pay into HTF as they would otherwise pay into Medicare, but naturally by much smaller amounts due to reduced exposure of HTF buffered by the first and second tiers. Statutorily, HTF should only be used for EBHS and otherwise untouched by Congress and the President.

Marginalized people with medium to no income may sign-up for the Premium Assistance Program (PAP) for assistance in paying their premiums. See below.

 
5. MEDIUM TO LOW INCOME AND NO INCOME BRACKETS &

THE  Remarkable PREMIUM ASSISTANCE PROGRAM (PAP)

For medium to low-income brackets, a special classification and sliding scale for pricing premiums at reduced rates is needed, so that no one is forced to be excluded from EBHS. Monthly premiums may be as low as $50 for these clients. The 3-tier arrangement remains the same, except that second tier insurance company-coverage is respectively reduced, so that HTF would “kick-in” when that reduced coverage is depleted. “No-income” premiums would be even lower than medium to low-income premiums. For example, the base premium may be $20, with coverage of, say, $20,000. HTF would take over after that insurance coverage is depleted. – Yet again, all clients continue to pay into EBHS even when the HTF (third tier) has been initiated. This requirement has two objectives. First, governmental expenditure is reduced by the continued payment of premiums, of which reliance on Government should be minimized to respectively minimize taxing Americans. The client should bear as much responsibility for his healthcare as he can afford. Second, since the continuing payment of premiums (during HTF third tier payments) would only be used for cursory care (doctor visits, preventive care, etc.), the opportunity to continue to build-up equity for the low\no-income client is still there, the continuing incentive for clients to shop around for value in healthcare, increasing competition, that serves to push down prices. In turn, lower prices further increases the client’s accruing equity.

For those with low-income or no-income who still would have trouble paying their premiums may solicit and utilize the tax-deductible Premium Assistance Program (PAP). This remarkable program allows anyone, including an individual, employers, for-profits, non-profits, philanthropists – even relatives – to contribute to paying part or all of premiums for financially distressed clients. As such, the contributed portion of the escrow remains the property of the contributor, inclusive of the accrued interest. If the escrow is still solvent at the end of the specified period (7 years), then a portion with interest of the total contributed portion (per say 50%) of that escrow may be returned to the contributor, inclusive of the initial contribution being tax-deductible. In this way, contributors may contribute with the possibility of not losing money, or minimizing loss, while assisting with helping the poor acquire healthcare. – The PAP list of contributors would be widely published for marginalized clients to apply. Contributions, of course, should be electronically paid directly to insurance companies, not the clients. Ideally, to minimize administrative costs, periodically (ex: quarterly) electronic reports are provided to clients and contributors by email.                       

Here again, PAP’s objective is to reduce Governmental liabilities within EBHS, to minimize taxation, and for the self-reliance and equitable progres of communities. PAP would help EBHS to demonstrate that the overwhelming funding of healthcare can be accomplished in the private sector, with very limited reliance on Government.


(Footnote 2: For example, a monthly $50 low-income premium may have coverage up to $40,000, while a $300 premium would be covered up to $300,000.)

 

Employers would Use PAP

            As with SPCID, it is within the interest of the equity-based concept for employees to reap the ready benefits of equity within EHBS. Fortunately, PAP allows an employer to assist in paying the premiums for his employees, while he also retains equity within the escrows of his employees. An employee would pay a portion of her premium that would accrue\build within the escrow, while the employer would pay the remaining portion for that employee that would accrue for the employer in the same account of said employee. In this way, equity accrues for both employee and employer.

 

6. NO DEDUCTIBLES, & PROCESSING, Generally

            Since escrow accounts are retained by clients and claims are initially paid from these escrows, deductibles are no longer justified, and thus should no longer be required. In addition, the insurance company has no say in the decision-making process of the client and doctor\practitioner, except for prescribed prognoses and procedures not accepted by EBHS. However, the insurance company may communicate a recommendation or opinion on a procedure or process of the practitioner to the client and\or pratictioner. – For example, any amount of tests may be performed without interference from the insurance company. But the client may consider the insurance company’s communication for reconsidering an action\procedure of the practitioner.

A practitioner would register within EBHS, and given a universal registration number, so that everyone may readily identify that practitioner. The insurance company is billed by the practitioner, for payments from escrows as well as from insured amounts. When an insured amount is depleted, official notification is given to the client and the HTF processing center, so that HTF will be alerted of a probable third-tier claim from that client. – With this simple 3-tier system that requires communica-tions amongst the parties, transactions are easily tracked that would tend to reduce healthcare fraud, for further savings within the industry. Clients now have an abiding interest in what’s going on.

7. PREVENTIVE HEALTHCARE EDUCATION PROGRAM

Government cannot be taken seriously about really caring for healthcare without providing a public preventive healthcare educational program that teaches healthy lifestyles to its citizens. For example, what are the precautions for preventing Type II diabetes, obesity, hypertension, etc.? What is milk thisle? What manufacturers make the best multivitamins? What are phytonutrients?

Some people only need to be regularly reminded of healthy behaviors to change their behaviors, while others will act from hearing the information for the first time. In keeping with President Obama’s motto that “Everybody must sacrifice” in developing a comprehensive, viable healthcare system, under authority of the Federal Communications Commission broadcasters should be required to 1) donate air time to public messages that teach healthy behaviors and lifestyles, and 2) produce at least one show for broadcasting about healthy behaviors and lifestyles. And naturally, the Preventive Healthcare Education Program (PHEP) should exploit public access on the internet.

PHEP would assist in helping our nation to think more in terms of preventive care. For obviously, preventive care reduces the need for healthcare, and everybody benefits. As stated, with everyone having access to EBHS, the insurance company would  make its profits from the efficiencies of EBHS, and as the expenditures by Government are respectively minimized. With PHEP, EBHS would only be a “high class” savings account for most Americans while having healthcare protection.

(Footnote 3: For example, plastic surgery would not be accepted.)

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